Breaking the Confusion Around SegWit2x
This controversial topic has left investors, users, and organizations perplexed. Many in the Bitcoin community have pitched their opinions about the matter, have made their decisions, and advocated for or against SegWit2x. With good arguments speaking for either side, it is now on the users to try and understand this situation, in order to make a decision about their Bitcoins.
This article is here to cast away some of the confusion. It is meant to provide clarity and understanding of the effects (and possibility) of the choice Bitcoin users and owners will have to make come November. To achieve this, we will take a look at both sides of the argument, those supporting the hard-fork and those opposing it.
At the end of this article, you will find a series of links for further reading and watching. These are all the sources that were used to generate this report and I try to provide my honest, down to earth opinion of the Segwit2x situation as we are facing it today.
It all started in New York.
With the agreement that happened on May 23rd, 2017 in New York City, a chain reaction was set forth, which peaked with the SegWit lock-in via BIP91 this August, and the creation of Bitcoin Cash via UAHF just a few hours later.
As part of the Consensus 2017 conference, several leading Bitcoin organizations agreed to the following two steps:
Members of the Bitcoin Core development team did not participate in this agreement or cosign it, even though they were invited. There were some concerns being expressed about SegWit on their mailing lists, which you can find in a link in the following section.
This agreement was conducted between blockchain companies mainly providing mining, payment solutions, and wallet services. Leading force behind the agreement was the Digital Currency Group, represented by Barry Silbert. With step one fully locked in, and Segwit activating shortly after, we are closing in on the deadline for the 2MB block size increase, a hard-fork which is expected to take place sometime in mid-November.
Disagreement from Bitcoin Core Developers.
SegWit2x is a result of the New York Agreement that many in the Bitcoin Core Development Team disagree with, as illustrated by their statement created to resolve misleading information concerning the BTC1 GitHub project, and it’s involvement with SegWit.
Delving deep into Bitcoin Core’s mailing list, we found a conversation where some concerns were raised regarding the need for forcing SegWit adoption (BIP 148 – mandatory activation of SegWit), and whether there is real value in pursuing that string of development.
Talking with several Bitcoin Core contributors on their Slack revealed some opinions on the matter. They believe what is being pushed right now is an attack on Bitcoin, and should it go uncontested it might put the integrity of the entire network at risk.
The main problem.
SegWit is a legitimate upgrade to the Bitcoin network that will facilitate many improvements, such as the Lightning Network. It has been peer-reviewed and sanctioned by the Bitcoin Core Developer Team.
SegWit2x is a different proposal that wants to change the block size limit for the entire network and doesn’t have backward compatibility, i.e. it would render older versions of the software obsolete, and their blocks invalid to the rest of the network.
As illustrated by this article from Eric Lombrozo, a contributor to the Dev Team says: “By late 2015 the framing had gotten so bad that people were just screaming for 2MB, period. It’s like in a sudden frenzy, the entire population around a nuclear power plant decides they need to double the size of its main reactor to keep up with demand — without considering any of the effects that might have on the proper functioning of the power plant. I mean, what could possibly go wrong, right?”
Out of all of the mining pools, only Slush Pool and F2pool are not signaling support for SegWit2x. We used this website as the source for this information.
Personally, I would like to stay out of political issues, and I do believe this is a political issue at the heart of it. I.e. Who has the power over Bitcoin, and whose technology will proceed to be implemented as reference client in the future.
The power of decisions.
Bitcoin’s power draws from the consensus achieved on the state of the ledger. BIP148 proposed a significantly different idea, one where consensus is also reached based on non-mining nodes signaling SegWit support. This would lead to a fundamental change in the way Bitcoin consensus is reached, and it is a classic “foot in the door” negotiation tactic.
It will leave the door open for further changes to the Bitcoin consensus rules, and with that, even more changes may appear that influence how the network consensus is reached. While I am a proponent for innovation, I am also a strong believer of “Don’t break it if it works”.
Safe to say, Bitcoin illustrates the weight of decisions in real life, and decisions made on the day of the hard fork will be forever written in the blockchain.
Enter: The world’s first blockchain elections
Like it or not, the users have the power in the end.
These companies go behind closed doors to make decisions and agreements over a payment network that has thousands of people invested into it. The reason all these people invested in Bitcoin is because of the capabilities as a payment network, capable of transcending borders in this policy-divided world (providing them with a low-cost payment solution).
Now, this statement is being put to the test.
From my own personal perspective, the miners will undoubtedly follow the users and especially market activity as a tool for making their correct choice on which network to support (in case of a hard-fork).
With the Bitcoin Core Development Team disagreeing with SegWit2x, it makes it highly probable that some form of division will happen on the day of the fork
What happens next will be decided by a combination of factors, but the main one will be on which network most transactions will take place. Considering the long list of companies that are supporting SegWit2x it would require a sufficient amount of user consensus in order to achieve a strong enough power to drive decisions in this ecosystem.
So far, users have been the most underestimated stakeholder in Bitcoin, with many of them being mostly uninterested in how the network continues to develop and what changes are implemented, as long as their money is safe.
What I’m trying to say is that your money is at stake, and I wish I knew what the best course of action would be to continue from this point. Unfortunately, I can’t tell which one, so in the end, the decision is yours. However, I would love to hear your opinions in the comment section. Are you supporting or opposing SegWit2x? What were the reasons for your decision?
As promised at the beginning of the article, here’s the list of sources that helped to create this article, and that might help you make your decision about SegWit2x:
- Bitmain’s contingency plan against UASF
- Bitcoin Roundtable Consensus
- BIP148 and UASF FAQ
- List of Segwit Support
- Bitcoin Magazine Segwit Timeline
- Bitcoin Core Segwit Statement (non 2x)